America's Achilles Heel — Battery Cells for Drones

200 GWh of the Wrong Batteries

The U.S. battery manufacturing narrative sounds impressive: approximately 150–200 GWh of operational cell capacity, over a dozen major facilities, billions in investment. But a closer look at what these factories actually produce reveals a critical mismatch with defense needs.

Not one of these factories makes the small, high-discharge pouch cells that drones require.

Why Drones Need Pouch Cells — and Only Pouch Cells

Battery cells come in three form factors: cylindrical, prismatic, and pouch. For ground vehicles, the choice between them involves tradeoffs. For drones, there is no real choice — pouch cells are the dominant option.

For a drone, every gram determines mission capability. A pouch cell pack delivers 15–30% more energy per kilogram than an equivalent cylindrical pack. That translates directly to longer flight time, heavier payload capacity, or both. Pouch cells can also be shaped to fit irregular airframe cavities, eliminating wasted space in compact drone bodies.

The majority of small and medium drones — from Skydio's X10 to DJI's Matrice to loitering munitions like Switchblade — use lithium polymer (LiPo) pouch cells. Some longer-range FPV platforms use cylindrical Li-ion cells (18650/21700) for their endurance advantages, and larger military drones like the MQ-9 Reaper are fuel-powered aircraft entirely. But the explosive growth in drone warfare is concentrated in the small, battery-powered category — and that category runs overwhelmingly on pouch cells.

The U.S. has built an EV battery industry. It has not built a drone battery industry.

The Pouch Cell Gap: Where the Cells Actually Come From

The global supply chain for drone-grade pouch cells is overwhelmingly Chinese:

- Chinese manufacturers like Grepow/Tattu (Shenzhen), Gaoneng (GNB), and dozens of others produce the vast majority of the world's drone-grade LiPo pouch cells

- Over 90% of the U.S. drone battery supply chain relies on Chinese-made cells

- The FCC banned foreign drone batteries in December 2025, but China makes 99% of them — creating a compliance mandate with no domestic supply to satisfy it

A handful of U.S. companies are beginning to address the gap, but none operate at commercial scale. Badland Batteries / Packet Digital (Fargo, ND) has an 80,000 sq ft factory under construction and received a $50M DoD APFIT award, with early production targeting 2026. Amprius and Nanotech Energy announced a partnership in February 2026 to manufacture NDAA-compliant silicon-anode pouch cells at an initial 800 MWh capacity. American Lithium Energy produces small-batch pouch cells for UAV pack replacements at pilot scale.

These are a start, but represent a fraction of a percent of the volume needed.

The Skydio Warning Shot

In October 2024, China demonstrated exactly how the pouch cell gap can be exploited.

After Skydio — America's leading domestic drone manufacturer and a key supplier to U.S. defense and public safety agencies — sold drones to Taiwan's National Fire Agency, China sanctioned the company. Skydio's sole battery provider, Dongguan Poweramp (a TDK subsidiary operating under Chinese jurisdiction), was ordered to sever all ties immediately.

What got cut off? LiPo pouch cells. The same cells that no U.S. factory produces at scale.

- Skydio was forced to ration batteries from three to one per drone

- The company could not secure replacement suppliers until spring 2025

- Production and delivery timelines were disrupted for months

Skydio's drones use a 3S1P lithium polymer pouch battery. This is not an exotic component — it is the standard cell format for the vast majority of drones. And the United States, despite spending billions on battery factory construction, could not supply it domestically.

That was peacetime, against a single company. In a conflict, every pouch cell supply line — direct exports, upstream materials, manufacturing equipment — would be at risk simultaneously.

The Battlefield Runs on Pouch Cells

Drones and autonomous systems across every domain depend on pouch cells:

Ukraine has made this concrete. Both sides consume thousands of drones per month. Sustained drone operations require a continuous supply of pouch cells.

In March 2026, the U.S. Air Force initiated "broad-reaching" battery and energy storage research, seeking to improve energy density by 2–3x current capacity for unmanned systems and weapon platforms. The 2025 NDAA mandated a department-wide battery strategy.

The Broader Supply Chain Vulnerability

The pouch cell gap sits within a wider pattern of Chinese battery supply chain dominance:

Even the foreign-owned EV cell factories on U.S. soil depend on Chinese-controlled upstream materials. A factory in Ohio assembling cells from Chinese cathodes, Chinese anodes, and Chinese-processed graphite is a Chinese supply chain with an American zip code.

According to defense analytics firm Govini:

- 78% of U.S. weapons systems are at risk of disruption due to Chinese supply chain dependencies

- Over 43,000 supply chains feeding into U.S. defense programs have some level of Chinese dependence extending down six tiers

- More than 1,900 DoD weapons systems contain critical minerals where 88% of supply chains are influenced by China

- Nearly 1 in 10 "Tier 1" subcontractors to major defense primes are Chinese firms

The Foundation for Defense of Democracies, in a July 2025 report, was blunt: "China's exploitation of the advanced battery market presents a clear and present danger to U.S. national security."

China Is Restricting Access — Including to Drone-Grade Cells

Over the past 18 months, China has expanded export controls over battery technology and materials:

July 2025: China's Ministry of Commerce added eight critical battery technologies to its export restriction list, including cathode technologies (LFP and LMFP) and lithium extraction processes.

October 2025: Major escalation — export controls expanded to cover high-performance lithium-ion batteries with energy density of 300 Wh/kg or higher (a threshold that directly covers military drone-grade pouch cells), cathode materials and precursors, graphite-based anode materials, and battery manufacturing equipment — winding machines, lamination machines, liquid injection machines — the very tools needed to build a pouch cell factory.

Also October 2025: Rare earth export controls extended beyond physical goods to govern technological know-how and foreign-made products using Chinese inputs.

November 2025: As part of a U.S.-China trade truce, Beijing temporarily suspended some restrictions — but only until November 2026, creating a one-year window that could close at any time.

The 300 Wh/kg threshold matters because it falls squarely in the energy density range of advanced drone pouch cells.

The Worst-Case Scenario

Consider a sustained conflict with a near-peer adversary:

- Drone pouch cell supply from China ceases immediately. With 90%+ of drone battery cells sourced from Chinese manufacturers, U.S. drone operations would face immediate supply constraints.

- Existing U.S. battery factories cannot pivot. The cylindrical and large-format EV cell lines in Nevada, Kansas, and Texas cannot be retooled to produce small-format, high-discharge pouch cells. Different equipment, different processes, different expertise.

- Upstream materials are cut off. Even if pouch cell factories existed, they would need Chinese-controlled cathodes (82–87% of global supply), anodes (91–97%), and graphite (95%+).

- There is no strategic reserve. Unlike petroleum, the United States maintains no stockpile of battery cells. Batteries degrade over time, making traditional stockpiling impractical.

- Drone attrition is massive. Ukraine has demonstrated that modern conflict consumes thousands of drones per month. Without a continuous supply of pouch cells, drone operations would degrade from a sustained capability to a rationed, diminishing one.

The 2024 NDAA prohibits DoD procurement of batteries from six Chinese companies (CATL, BYD, Envision, EVE, Gotion, Hithium) starting October 2027. But prohibiting procurement without building domestic pouch cell manufacturing creates a ban with no supply to fill the gap.

The Battery-Semiconductor Parallel

The drone pouch cell gap mirrors the semiconductor supply chain vulnerability that triggered the CHIPS Act — but with critical differences that make it arguably more dangerous:

A cylindrical cell line cannot produce pouch cells any more than a DRAM fab can produce GPUs.

What Would It Take?

Closing the gap requires:

Dedicated Drone-Grade Pouch Cell Manufacturing: The U.S. needs purpose-built pouch cell factories producing the small-format, high-discharge cells that drones and autonomous systems require. This is a different product than EV cells — it requires different equipment, different chemistries (high-energy NMC, silicon anodes), and different quality standards (military-grade thermal and shock tolerance).

Scale the Emerging Players: Companies like Badland Batteries/Packet Digital (Fargo, ND) and Amprius/Nanotech Energy are moving in the right direction but need capital, procurement commitments, and regulatory support to reach defense-relevant scale. The DoD's $50M APFIT award to Packet Digital is a start — but orders of magnitude below what is needed.

Upstream Material Diversification: Domestic or allied-source cathode, anode, and graphite processing must be built. Without this, even new pouch cell factories would remain downstream extensions of Chinese supply chains.

Strategic Partnerships with Trusted Allies: Taiwan has emerging pouch cell specialists with proprietary IP and manufacturing expertise developed for drone and defense applications. These companies offer a near-term path to non-Chinese pouch cell supply while domestic capacity is built.

Policy at CHIPS Act Scale: The drone battery vulnerability requires a legislative response commensurate with the CHIPS Act. Building a gigafactory costs $50–100 million per GWh. Current funding is scattered across DOE programs and IRA provisions without the strategic focus the problem demands.

Conclusion: The Right Problem, the Wrong Batteries

The United States has spent billions building battery factories. None of them can power a drone.

The domestic battery industry is entirely oriented toward electric vehicles — cylindrical and prismatic cells that are physically incapable of powering drones, loitering munitions, or autonomous systems. Meanwhile, Skydio got its pouch cell supply cut overnight, China has imposed export controls on 300+ Wh/kg cells, and the FCC banned foreign drone batteries that China makes 99% of.

The U.S. does not have a battery manufacturing problem. It has a pouch cell manufacturing problem.